Weak China Actions Hit Copper Sentiment

Copper prices are continuing to slide through the back end of the week. The futures markets has been under steady selling pressure amidst disappointment at the recent stimulus measures announced in China. The Chinese government outlined plans to help the country’s ailing property sector, including the expanding of a ‘white list’ of eligible housing projects for financing. That financing has also been increased to 4 billion Yuan.  While the measures are encouraging, the reaction in Chinese equities markets and commodities markets suggests that traders were looking for firmer support.

USD Moves

Copper prices are also being weighed on by the continued recovery in USD. The Dollar has been on a steady run higher recently with the trade-weighted index up over 3% off the YTD lows. A big driver behind this move, another factor weighing on copper prices, is the recent uptick in bullish Trump sentiment. Trump has been very vocal recently about his planned protectionist trade policies should he be re-elected, including heavy tariffs on trade partners.

Trump Trade

Traders are now having to price in the impact of a possible Trump win which is seeing USD trading firmly higher here with the commodities complex coming under pressure. With the elections just three weeks away, any news regarding Trump polling-gains is likely to further drive this dynamic. However, any shift towards a stronger expectations of Harris win should see these moves tempered.

Technical Views

Copper

The sell-off in copper has seen the market trading back down to test the 4.30 level support. With momentum studies bearish, the market is at risk of a much deeper drop towards 3.9350 if we break below here. Topside, bulls need to get back above 4.5785 to alleviate bearish pressure.